Facing the daunting task of following a perfect score, investment analyst Peter Hodson of 5i Research has released his annual market forecasts, this time looking ahead to 2026. After successfully predicting five out of five trends for 2024, Hodson admits he tried to avoid his editor when the time came for his 2025 review and new predictions. His trepidation, however, proved somewhat unnecessary, as he gives his team a passing grade of 3.25 out of five for their 2025 calls, aided by what he calls "semantics."
Grading the 2025 Forecasts
In a column published on December 11, 2024, Hodson and 5i Research made five key predictions for the year. The first, that U.S. President Donald Trump would be good for the stock market, earned a full point. With the S&P 500 index rising approximately 16 percent in 2025, barring a late-year collapse, this call was deemed correct.
The prediction that small-cap stocks would perform "better" was more nuanced. While the U.S. Russell 2000 index is up about 13 percent year-to-date, it once again lagged behind large-cap peers. Hodson concedes the prediction intended for small caps to beat large caps, but as "better" is still "better," he awards a partial 0.75 points.
A call for the Canadian dollar to lag the U.S. dollar resulted in a zero score, as the loonie actually gained about four percent against the greenback this year.
The team scored a full point on its artificial intelligence sector call, noting that AI performed very well in 2025 and the United States maintained its leadership. Finally, on bitcoin, Hodson's specific prediction of a new all-time high in 2025 was partially correct. Although the cryptocurrency is down about seven percent for the year, it did hit a record high of US$126,296 in early October, earning a half point.
Five Forecasts for the 2026 Market
With the 2025 review complete, Hodson turns his gaze forward with what he calls "guesses" for the coming year, acknowledging predictions are a "mug's game." His first and most striking forecast is a shift at the very top of the corporate world.
Alphabet Inc. will surpass Nvidia Corp. as the world's largest company by market capitalization. Hodson is not predicting Nvidia's demise but notes that Alphabet's momentum, driven by diverse high-growth exposures beyond AI—such as cloud computing, quantum computing, YouTube, Waymo, and SpaceX—positions it to close the gap. Nvidia, while an AI star, remains heavily tied to that single sector. Alphabet shares have risen about 60 percent in 2025, compared to Nvidia's 25-30 percent gain. With Nvidia's market cap at roughly US$4.3 trillion and Alphabet's at about US$3.7 trillion, Hodson believes it won't take much for Alphabet to claim the top spot. He acknowledges Apple, with a US$4.0 trillion market cap, could disrupt this prediction if it performs strongly.
The Broader Equity and Sector Outlook
Hodson's other predictions for 2026 touch on broader market themes. After three consecutive years of gains and positive returns in five of the past six years, he suggests a slowdown in stock market growth is a "scary" but possible outcome for 2026. This aligns with a cautious outlook for equities overall.
He also makes specific calls regarding small-cap stocks, oil prices, and the continued prominence of gold as a strategic asset, though the full details of these predictions are outlined in his broader analysis. The overarching theme is one of selectivity and a potential rotation, with mega-cap tech leadership potentially changing hands as investors seek value and diversification in a market that may be losing some steam.
As always, Hodson reminds readers that these are forecasts, not certainties, and the unpredictable nature of global markets means investors should use such insights as part of a broader, disciplined strategy.
